His parents were Thomas Hay, seventh earl of Kinnoull (c.1660–1719) and Elizabeth (1669–1696). He was their third son, with their first son, George (d. 1758), succeeding their father. The family was sympathetic to the Stuart kings but still felt that being Protestant and serving Queen Anne and supporting the Harley administration did not mar this sympathy and loyalty.

However, in 1725, one of James Stuart's wife Clementina's cited reasons for retiring to a convent was ill-treatment by Lord and Lady Inverness, and another was Murray's being imposed on her as her children's governor despite being a Protestant. These complaints may, however, have been influenced somewhat by the children's former governess Mrs Sheldon, sister-in-law of John Erskine, 6th Earl of Mar. Mar's failed rebellion in 1715 and further intrigues had eventually led to his being replaced by John Hay as James Stuart's intermediary between the exiled Jacobites and those still in Britain, and Mar had sworn revenge on Hay for this loss of royal favour. However, other Jacobites' correspondence suggests that some ill-treatment of Clementina by the Hays did occur, though the suggestion that Lady Inverness and James Stuart were having an affair, with Lord Inverness turning a blind eye, is less likely to be a fact than merely a rumour begun by Mar and the English government. Whatever the reasons for Clementina's retirement, however, it began to alienate James Stuart's supporters in Britain as well as the main contributors to his pension, Pope Benedict XIII and the King of Spain, and so he reluctantly accepted Hay's resignation as Secretary of State in 1727, upon which Clementina left the convent but threatened to return at any time should her husband or his court step out of line. James nevertheless elevated Hay in April 1727 to the titular Dukedom of Inverness and further created him Baron Hay in the Jacobite Peerage of England.

Hay moved out of active political involvement into retirement in the Jacobite colony in Avignon, France by 1738, to which James Murray also retired later. In that year, with his brother William garnering European support for James and a Jacobite invasion of Britain, and Anglo-French relations on the slide, Thomas wrote to Dr. Robin Wright, James Francis Edward Stuart's physician, stating:

“

Avignon Jany. 13th, 1738. You could not have done me a greater pleasure my Dear Doctor than by the particular account you give me of the health of the Royal family, tho I hear every week from Rome, yet on that while which is to me the principal ones. Your letter is my authentick, I thank you my Dear sir for your good wishes on the new year and may God that before the end of it wee may be all home and that I may see you the gift of your profession in England which I don't despair of. Ly. Inverness makes you many complts. and is ever mindfull and gratefull for the many essential services you have rendered her. Do me the justice to believe me att all times my Dear Doctor. Your most Obedt. humble Servt., Inverness